Word of Mouth

I listened to a story on NPR this afternoon about the negative impact of bad word-of-mouth, you can listen to it here. Very scary. This is part one of a two part story by Wendy Kaufman, hopefully the second part will bring out the positive aspects from good word-of-mouth.

The basis for the article comes from research by the Wharton School of Business. They found that 1 out of 2 customers has a customer service problem when they shop. Worse is the fact that they then tell friends, family, and colleagues about it and embellish the story in the retelling. The overall result is that 1/2 of those that hear the bad news story won't shop at those places they heard about. Ouch! Those that improve on the situation certainly create a business advantage.

It goes to show the need for businesses to hear from their customers, the bad news as well as the good. Hearing the bad news you can make efforts to correct the situation so that bad embellished stories won't be spread. You even have the opportunity to turn a detractor into a promoter. You can also get to the root cause and fix it to reduce future bad experiences.

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Get customer feedback, generate referrals, and increase repeat sales for as little as $150 a month. Learn more

About six months ago I wrote about a small, bricks and mortar business that had successfully implemented and was enjoying the fruits of an online system that increased word-of-mouth marketing for their business. You can read the original post here. In a nutshell, the business is a haircut salon for men--a Sportclips franchise to be exact. The owners, Chuck and Joan Matheny, were using Promoterz to 1) Collect feedback from their customers, 2) Establish an "opt-in" email relationship through which they could communicate directly with their customers, and 3) Give their customers an easy way to tell their friends about their store. Top line result: more than a 20% increase in revenue.

Here is a new chapter in their saga:

Corporate SportClips introduced and has been encouraging franchisees to promote a "Season Ticket" concept. Customers willing to pay for six haircuts in advance get a free upgrade to MVP service on each of those haircuts (MVP includes a hot towel and shoulder massage among other things). Because several hundred of the Matheny's customers have asked to receive updates about the store by email, promoting the Season Ticket with an email seemed like a natural. Think about the value of Chuck's email list: because he had reached out to his customers and provided a way for them to opt-in, he could now communicate with those that wanted to hear from him directly and at absolutely no cost. He didn't have to wait for them to come into the store or pay for an expensive ad.

Rather than just encouraging the customers to come in to a store and ask for a Season Pass, we decided to put the technology to the test and offer the customers a quick and simple way to buy the card directly online. The email included a "one-click" buy button. Customers could opt to have the card mailed to them or come into the store and pick it up. The test has been a great success. Several customers have purchased online and the orders continue to come in. Cha-ching! A new online revenue stream for a bricks and mortar business.

Small test--significant implications. Here is a small "old industry/bricks and mortar" business that has figured out a way to use the internet--not as a glorified yellow-pages ad, but as a tool to generate new revenue streams, increase repeat customer visits and collect new leads--all of which have a direct impact on the top and bottom lines.

The real "no-brainer?" The Matheny's used Promoterz to do all of this. The cost: $50 per month per store.

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Customers who feel that you are listening to them are more likely to recommend you to a friend. How do your customers know that you are listening? Learn more

I received a newsletter today from the folks at Nova Mind. Nova Mind makes a great mindmapping application that I use quite a bit. They also have a project management package for the Mac that looks good. I have yet to give it a try. Anyway, one of the lines in their newsletter caught my attention:

We often find that there is a single license sold in a particular place, and then within a couple of weeks there is a huge cluster of licenses sold within that same area, and we would like to thank all of you who think of your friends and associates now and recommend NovaMind to them.

What a beautiful thing! Isn't that what we all want? Self-multiplying customers! Nova Mind has some great products. They work well and have a significant impact on your productivity. It is hard not to talk about them (ask Joe and Dan how many mindmaps they have seen from me).

As we all know, in today's chaotic marketplace new customers are hard to get. Once you get them, it makes a whole lot of sense to not only keep them, but keep them so happy they multiply.

If you are in the service business--for that matter if you are in any business--no matter how hard you try to be perfect, sooner or later a customer is not going to be pleased with the service they receive. The inevitability of it shouldn't discourage you from trying to be perfect, but when a mistake happens the recovery should become job #1.

That dissatisfied customers tell their friends is a fact. How many they tell on average varies depending on the study referenced but it is somewhere between 4 and 10. One study notes that those they tell are 5 times less likely to come to your business than the original dissatisfied customer. Ouch.

But there is hope. According to Restaurant Hospitality "Rule-of-thumb numbers show that roughly 60 percent of complaining customers will eat at your restaurant again if you resolve their service issue, and almost all customers (96 percent in some studies) will come back if you solve their problem to their satisfaction and do so quickly."

What is the best way to resolve issues? Hospitality cites a study called “An Examination of Guest Complaints and Complaint Communication Channels: The Medium Does Matter!” out of Cornell University School of Hotel Management. It concludes that nearly fifty percent of unhappy guests want to talk to the boss. Free drinks and comp meals are nice, but what they really want is to let the boss know.

So how easy do you make it for your customers to let you know about the service? You can't always be in your business. Do you make it easy for them to contact you? You might be surprised what you learn and you will certainly have the opportunity to "save" good customers.

Plug from our sponsor: The Promoterz system is one easy way to make sure customers always have a direct link to you and you have a direct and convenient way to respond to them. The system invites every customer to provide feedback online and immediately notifies you and your managers of feedback as it is received.

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Promoterz is the hands-free, word-of-mouth marketing service that takes care of the details so you can focus on business. Learn more

Business Week's question of the week this week asks with ads everywhere "is advertising today creative--or creepy? How far should Mad Ave go?" I found the 3 responses they included interesting:

Joe Gardner, features and business affairs editor at The Onion, notes that if people "don't read all blogs with a discerning eye, they deserve any deception that's heaped upon them."

Kalle Lasn, co-founder of Ad Busters magazine, responds that "3,000 marketing messages a day seep into the average North American brain. That level of advertising is stressing us out."

And Ted Murphy, CEO of PayPerPost.com says that younger generation knows that to get free content they have to put up with product placement. In his estimation "it's a trade off they're willing to make."

As business owners, the real question for all of us is in this kind of environment is how do we effectively let those that would be interested in our product or service know we exist? There are probably many answers to that question, but near the top of the list has to be our customers. Those who have used our product or service should become our greatest and most powerful advocates in spreading the word.

Disclaimer: in an effort to help you avoid any deception being heaped upon you, this blog is sponsored by Promoterz, a great tool to help business owners turn their customers into advocates.

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When you pass out a Promoterz bounce back card you automatically build an accurate customer list, increase repeat sales, increase referrals and prevent lost business. Pretty powerful little card. Learn more

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